THE CONSEQUENCES OF CITIZENS UNITED v. FEDERAL ELECTION
COMMISSION
TESTIMONY BEFORE THE JUDICIARY COMMITTEE,
NEW JERSEY GENERAL ASSEMBLY

1
THE CONSEQUENCES OF CITIZENS UNITED v. FEDERAL ELECTION
COMMISSION
TESTIMONY BEFORE THE JUDICIARY COMMITTEE,
NEW JERSEY GENERAL ASSEMBLY
February 18, 2010
My name is Alan Tarr. I serve as Director of the Center for State Constitutional Studies, and Professor in the Department of Political Science at Rutgers University in Camden. My teaching and research focus on constitutional law.
In Citizens United v. Federal Election Commission, decided in January of this year, the United States Supreme Court struck down provisions of the federal Bipartisan Campaign Reform Act of 2002 that barred corporations and unions from using funds from their general treasuries to support electioneering or other candidate advocacy within 30 days of a federal primary election or within 60 days of a general election for federal office. The Court declined to decide the case on narrow grounds and issued a very broad ruling. Although that ruling directly affected only the federal law at issue, the majority expressly recognized that the states had long banned corporate expenditures and speech meant to influence elections, and it stressed that these laws had never been endorsed by the Court. What, then, is the likely effect of Citizens United if states impose restrictions on corporate or union participation in the electoral process?
I believe that any state law restricting corporations and unions from independently financing ads or other communicative expenditures from their treasuries are likely to be 2
struck down as unconstitutional. This is not my conclusion alone. As Justice John Paul Stevens warned in dissent, “dozens of state laws” were put in jeopardy by the Court’s ruling. To explain why, let me highlight some aspects of Justice Anthony Kennedy’s opinion for the Court.
The opinion speaks in very broad terms—to quote Justice Kennedy’s summary statement, “the Government may not suppress political speech on the basis of the speaker’s corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.” This is so, Kennedy insists, because First Amendment protections extend to corporations as well as to individuals. Or as the Court puts it, people do not lose their First Amendment rights when they band together in corporate form to advance their views. Kennedy claims that speech by corporations and unions serves First Amendment ends. To quote again, “Political speech is indispensable to decision-making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.”
Does this mean that the First Amendment prohibits all limits on corporate political speech? The Court does not go that far, recognizing while “laws that burden political speech are subject to strict scrutiny,” restrictions that “further a compelling interest and [are] narrowly tailored to achieve that interest” can survive constitutional scrutiny. Yet most of the rationales that states might offer to justify restrictions on independent expenditures by corporations and unions were advanced by the federal government in Citizens United and were rejected by the Supreme Court. 3
A state might argue that restrictions on corporate speech are necessary to prevent a distortion of the political process caused by vast infusions of corporate cash. However, in Citizens United the Supreme Court emphatically rejected this rationale, expressly overruling Austin v. Michigan Chamber of Commerce, a 1990 precedent that relied on such an argument. The fact that there may be little correlation between the level of corporate expenditures and the extent of public support for corporate ideas was deemed irrelevant. The point of the First Amendment, the Court argued, was to get all viewpoints before the public in order to better inform decision-making.
A state might also seek to justify restrictions on corporate political speech as a way to protect dissenting shareholders. But the Court held that shareholders already were sufficiently protected by the “procedures of corporate democracy,” that is, their right to vote to prevent use of corporate funds for such speech or to sell their shares if they did not wish to be associated with political positions taken by the corporation.
A state might also justify restrictions as a way to avoid political corruption—indeed, this is the rationale that historically has been used to limit corporate involvement in elections. The Court acknowledged that direct corporate donations to candidates or office-holders might lead to corruption and thus could be regulated. In doing so the Court reaffirmed its holding in Buckley v. Valeo, and so state regulations of political contributions by corporations or unions are unaffected by Citizens United. But it insisted that independent corporate expenditures during the election cycle do not promote corruption. Even if such expenditures might lead to greater influence or access, greater 4
access or influence is not the same as corruption, which requires a quid pro quo exchange.
Alternatively, a state might justify its restrictions on corporate or union political speech as a way to avoid the appearance of corruption, which might undermine popular faith in the electoral process. Once again, however, the Court dismissed those fears as groundless, given the lack of connection between candidates or officeholders and corporations or unions independently participating in the electoral process.
Finally, a state might argue that its restrictions on corporate and union expenditures do not in fact limit their speech rights, because those entities retain the option of forming political action committees (PACs). However, the Court concluded that the opportunity to form a PAC does not justify restrictions on speech by unions and corporations, just as the opportunity to speak as an individual would not justify restrictions on speech by associations of which one might be a member. Moreover, Justice Kennedy asserted that the PAC alternative was not an adequate substitute for direct participation. For one thing, the requirements for forming PACs are so onerous that most corporations have been either unable or unwilling to do so. For another, a corporation or union might not know until an electoral campaign has begun whether it wishes to participate in the public debate, and if it were required to form a PAC before it could do so, the opportunity might be lost, as would its contribution to the debate.
What then is left to state law-makers after Citizens United? Most importantly, states may continue to regulate corporate or union contributions to political campaigns or public officials. Thus, for example, Governor Christie’s recent executive order extending 5
pay-to-play restrictions to unions should be unaffected by Citizens United. The Court reaffirmed the distinction it drew between contributions and independent expenditures in Buckley, based on the greater potential for corruption of the former. Justices Scalia and Thomas have rejected that distinction, but they are unlikely to prevail.
States may also compel disclosure of independent expenditures, and they may disseminate that information—the Court by an 8-1 vote rejected challenges to the disclaimer and disclosure provisions of the federal election law. In the wake of Citizens United, states may consider strengthening their reporting requirements and making that information more immediately available to the public.
States may in addition be able to regulate the electoral participation of corporations that were created in foreign countries or are funded predominantly by foreign shareholders. The Court majority specifically noted that such a concern was not before them in Citizens United, and so they had no need to address the question.
States may enhance opportunities for shareholders to control corporate decisions about whether to engage in electioneering. For example, it has been suggested that state law might require that individual or institutional shareholders be given the opportunity to opt out or opt into electioneering expenditures with their shares. This would basically give shareholders the same opt-out rights currently available to union members and dues-payers under the First Amendment. Electioneering money would thus be in a separate account, funded only by those shareholders who expressly agreed to this—the functional equivalent of a PAC arrangement. 6
Finally, the Court noted that it had in the past upheld a narrow class of speech restrictions that operate to the disadvantage of certain persons, but these rulings were based on an interest in allowing governmental entities to perform their functions. This might seem more promising, but the cases that the Court cited involved restrictions on speech by prisoners, members of military, or civil servants—all therefore either government employees or persons under government supervision.
In sum, Citizens United v. Federal Election Commission is a broad ruling that is likely to prompt challenges to dozens of state laws. Given the tenuous 5-4 majority on the Court, it is conceivable that the precedent could be overruled or limited by a future Supreme Court, though none of the members of the Court majority are among those justices rumored to be ready for retirement. States will therefore, at least in the short term, have to explore other approaches to ensuring that corporations and unions do not play an inappropriate role in the political process.

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1
THE CONSEQUENCES OF CITIZENS UNITED v. FEDERAL ELECTION
COMMISSION
TESTIMONY BEFORE THE JUDICIARY COMMITTEE,
NEW JERSEY GENERAL ASSEMBLY
February 18, 2010
My name is Alan Tarr. I serve as Director of the Center for State Constitutional Studies, and Professor in the Department of Political Science at Rutgers University in Camden. My teaching and research focus on constitutional law.
In Citizens United v. Federal Election Commission, decided in January of this year, the United States Supreme Court struck down provisions of the federal Bipartisan Campaign Reform Act of 2002 that barred corporations and unions from using funds from their general treasuries to support electioneering or other candidate advocacy within 30 days of a federal primary election or within 60 days of a general election for federal office. The Court declined to decide the case on narrow grounds and issued a very broad ruling. Although that ruling directly affected only the federal law at issue, the majority expressly recognized that the states had long banned corporate expenditures and speech meant to influence elections, and it stressed that these laws had never been endorsed by the Court. What, then, is the likely effect of Citizens United if states impose restrictions on corporate or union participation in the electoral process?
I believe that any state law restricting corporations and unions from independently financing ads or other communicative expenditures from their treasuries are likely to be 2
struck down as unconstitutional. This is not my conclusion alone. As Justice John Paul Stevens warned in dissent, “dozens of state laws” were put in jeopardy by the Court’s ruling. To explain why, let me highlight some aspects of Justice Anthony Kennedy’s opinion for the Court.
The opinion speaks in very broad terms—to quote Justice Kennedy’s summary statement, “the Government may not suppress political speech on the basis of the speaker’s corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.” This is so, Kennedy insists, because First Amendment protections extend to corporations as well as to individuals. Or as the Court puts it, people do not lose their First Amendment rights when they band together in corporate form to advance their views. Kennedy claims that speech by corporations and unions serves First Amendment ends. To quote again, “Political speech is indispensable to decision-making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.”
Does this mean that the First Amendment prohibits all limits on corporate political speech? The Court does not go that far, recognizing while “laws that burden political speech are subject to strict scrutiny,” restrictions that “further a compelling interest and [are] narrowly tailored to achieve that interest” can survive constitutional scrutiny. Yet most of the rationales that states might offer to justify restrictions on independent expenditures by corporations and unions were advanced by the federal government in Citizens United and were rejected by the Supreme Court. 3
A state might argue that restrictions on corporate speech are necessary to prevent a distortion of the political process caused by vast infusions of corporate cash. However, in Citizens United the Supreme Court emphatically rejected this rationale, expressly overruling Austin v. Michigan Chamber of Commerce, a 1990 precedent that relied on such an argument. The fact that there may be little correlation between the level of corporate expenditures and the extent of public support for corporate ideas was deemed irrelevant. The point of the First Amendment, the Court argued, was to get all viewpoints before the public in order to better inform decision-making.
A state might also seek to justify restrictions on corporate political speech as a way to protect dissenting shareholders. But the Court held that shareholders already were sufficiently protected by the “procedures of corporate democracy,” that is, their right to vote to prevent use of corporate funds for such speech or to sell their shares if they did not wish to be associated with political positions taken by the corporation.
A state might also justify restrictions as a way to avoid political corruption—indeed, this is the rationale that historically has been used to limit corporate involvement in elections. The Court acknowledged that direct corporate donations to candidates or office-holders might lead to corruption and thus could be regulated. In doing so the Court reaffirmed its holding in Buckley v. Valeo, and so state regulations of political contributions by corporations or unions are unaffected by Citizens United. But it insisted that independent corporate expenditures during the election cycle do not promote corruption. Even if such expenditures might lead to greater influence or access, greater 4
access or influence is not the same as corruption, which requires a quid pro quo exchange.
Alternatively, a state might justify its restrictions on corporate or union political speech as a way to avoid the appearance of corruption, which might undermine popular faith in the electoral process. Once again, however, the Court dismissed those fears as groundless, given the lack of connection between candidates or officeholders and corporations or unions independently participating in the electoral process.
Finally, a state might argue that its restrictions on corporate and union expenditures do not in fact limit their speech rights, because those entities retain the option of forming political action committees (PACs). However, the Court concluded that the opportunity to form a PAC does not justify restrictions on speech by unions and corporations, just as the opportunity to speak as an individual would not justify restrictions on speech by associations of which one might be a member. Moreover, Justice Kennedy asserted that the PAC alternative was not an adequate substitute for direct participation. For one thing, the requirements for forming PACs are so onerous that most corporations have been either unable or unwilling to do so. For another, a corporation or union might not know until an electoral campaign has begun whether it wishes to participate in the public debate, and if it were required to form a PAC before it could do so, the opportunity might be lost, as would its contribution to the debate.
What then is left to state law-makers after Citizens United? Most importantly, states may continue to regulate corporate or union contributions to political campaigns or public officials. Thus, for example, Governor Christie’s recent executive order extending 5
pay-to-play restrictions to unions should be unaffected by Citizens United. The Court reaffirmed the distinction it drew between contributions and independent expenditures in Buckley, based on the greater potential for corruption of the former. Justices Scalia and Thomas have rejected that distinction, but they are unlikely to prevail.
States may also compel disclosure of independent expenditures, and they may disseminate that information—the Court by an 8-1 vote rejected challenges to the disclaimer and disclosure provisions of the federal election law. In the wake of Citizens United, states may consider strengthening their reporting requirements and making that information more immediately available to the public.
States may in addition be able to regulate the electoral participation of corporations that were created in foreign countries or are funded predominantly by foreign shareholders. The Court majority specifically noted that such a concern was not before them in Citizens United, and so they had no need to address the question.
States may enhance opportunities for shareholders to control corporate decisions about whether to engage in electioneering. For example, it has been suggested that state law might require that individual or institutional shareholders be given the opportunity to opt out or opt into electioneering expenditures with their shares. This would basically give shareholders the same opt-out rights currently available to union members and dues-payers under the First Amendment. Electioneering money would thus be in a separate account, funded only by those shareholders who expressly agreed to this—the functional equivalent of a PAC arrangement. 6
Finally, the Court noted that it had in the past upheld a narrow class of speech restrictions that operate to the disadvantage of certain persons, but these rulings were based on an interest in allowing governmental entities to perform their functions. This might seem more promising, but the cases that the Court cited involved restrictions on speech by prisoners, members of military, or civil servants—all therefore either government employees or persons under government supervision.
In sum, Citizens United v. Federal Election Commission is a broad ruling that is likely to prompt challenges to dozens of state laws. Given the tenuous 5-4 majority on the Court, it is conceivable that the precedent could be overruled or limited by a future Supreme Court, though none of the members of the Court majority are among those justices rumored to be ready for retirement. States will therefore, at least in the short term, have to explore other approaches to ensuring that corporations and unions do not play an inappropriate role in the political process.